This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

« Back to Results

Wages

Paper Session

Sunday, Jan. 5, 2020 1:00 PM - 3:00 PM (PDT)

Marriott Marquis, Torrey Pines 1
Hosted By: American Economic Association
  • Chair: Laura Giuliano, University of California-Santa Cruz

Are Educational Differences in the Gender Earnings Gap Causal?

Steffen Andersen
,
Copenhagen Business School
Philippe d'Astous
,
HEC Montreal
Jimmy Martinez-Correa
,
Copenhagen Business School
Stephen H. Shore
,
Georgia State University

Abstract

University programs of study differ in their enrollees' future earnings and in the gap between earnings of men and women. To what degree does this variation reflect selection -- i.e. men and women of varying abilities sorting into particular programs -- or causal effects -- i.e. programs differing in their impact on earnings for men and women? To answer this question, we exploit a discontinuity built into the Danish national university admissions system, providing quasi-random assignment of similar applicants to different programs. We then use administrative tax records of earnings to compare students assigned across this discontinuity to programs with low- or high-earning enrollees, and to programs with large or small gender earnings gaps. We find that enrolling in a program with higher-earning enrollees causes students to earn more, but the majority of cross-program earnings differences reflect selection. Entering a program whose enrollees earn \$1 more leads to a \$0.28 (C.I. 0.10 to 0.46) increase in earnings on average. Entering programs with larger gender earnings gaps — but the same average earnings — causes women to earn less on average, with no evidence that selection explains cross-program differences in the gender earnings gap.

Displacement Effects in Manufacturing: The Role of Firms

Ines Helm
,
Stockholm University
Alice Kügler
,
University College London
Uta Schönberg
,
University College London

Abstract

We assess the impact of the decline in manufacturing jobs on the cost of job displacement, using administrative data on firms and workers in Germany. We start by documenting that manufacturing firms traditionally paid substantial wage premia and that these high-wage jobs disappeared disproportionately over time. We then analyse what role such losses in the firm wage premium play in determining wage losses following job displacement. We show that low-skilled workers in manufacturing suffer larger wage losses than the high-skilled after job displacement, and that about half of the wage loss is explained by the firm at which a worker was employed before displacement. Persistent wage losses from layoffs, and the role of the firm in explaining these, have increased over time.

Do Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms

Sabrina T. Howell
,
New York University
J. David Brown
,
U.S. Census Bureau

Abstract

This paper examines how a cash flow shock affects wages, within-firm wage inequality, and firm growth. The cash flow shock takes the form of a government R&D grant awarded to small, high-tech U.S. firms. Using private ranking data, we establish causality with a regression discontinuity design. We find that a grant increases average wages (with a rent-sharing elasticity of about 0.29), an effect driven entirely by employees present at the firm before the award decision. All incumbent workers receive roughly a 16 percent increase in wages, except for the firm founder, who experiences a much larger effect. There is no effect of the grant on new hire wages. Together, these changes lead to an increase in within-firm wage inequality. The grant also increases employment and revenue, but a growth channel cannot fully explain the effect on wages. The results are most consistent with fairness playing an important role in wages.

Do Wages Fall When Women Enter an Occupation?

Jorgen Harris
,
Occidental College

Abstract

I present the first causal evidence on the effect of the entry of women into occupations on the wages of those occupations. In particular, I examine the effect of changes in the gender composition of an occupation on wages for men and women within the occupation. To determine the causal effect of a change in gender composition, I construct a shift-share instrument by using the dramatic increase in the relative educational attainment and workforce participation of women from 1960-2010 to instrument for changes in the gender composition of occupations with different levels of "exposure" to increased female work and education. I find evidence that a 10 percentage-point increase in the fraction of females within an occupation leads to an 8 percent decrease in average male wage and a 6 percent decrease in average female wage in the concurrent census year. Over the 10 years following the change in the gender composition, I find that the effect of such an increase in the fraction of females persists for male workers and grows for female workers, leading to an 8 percent decrease in male wages and an 11 percent decrease in female wages. I present suggestive evidence attributing this finding to effects of gender composition on the prestige and amenity value of occupations.

Wage Offers and On-the-Job Search

Tristan Potter
,
Drexel University
Dan Bernhardt
,
University of Illinois-Urbana-Champaign

Abstract

We study the wage-setting problem of an employer with private information about demand for its product when workers can engage in costly on-the-job search. Employers understand that low wage offers may convey bad news that induces workers to search. The unique perfect sequential equilibrium wage strategy is characterized by: (i) pooling by intermediate-revenue employers on a common wage that just deters search; (ii) discontinuously lower revealing offers by low-revenue employers for whom the benefit of deterring search fails to warrant the required high pooling wage; and (iii) high revealing offers by high-revenue employers seeking to deter aggressive raiders.
JEL Classifications
  • J3 - Wages, Compensation, and Labor Costs